States discredit Microsoft witness's testimony

An attorney with the US states suing Microsoft has poked holes in testimony from a Microsoft witness who said that the states' antitrust remedies were largely crafted by Microsoft competitors.

          An attorney with the US states suing Microsoft has poked holes in testimony from a Microsoft witness who said that the states' antitrust remedies were largely crafted by the software giant's competitors.

          The states told US District Judge Colleen Kollar-Kotelly that they have decided not to call rebuttal witnesses after Microsoft rests its case, despite the fact that she had already approved the request earlier in the week.

          Continuing his cross-examination from Wednesday, attorney for the states Steven Kuney questioned Kenneth Elzinga, a professor of economics at the University of Virginia, about his assertion that the states' remedies would give Microsoft competitors an advantage, if implemented. The states and Microsoft are presenting proposed remedies to Microsoft's anticompetitive behaviour during this hearing in front of Kollar-Kotelly, which began in mid-March.

          In his written direct testimony, Elzinga included a chart that attempted to show how Microsoft competitors influenced the creation of specific remedies proposed by the states. For example, Elzinga said that AOL Time Warner and RealNetworks called for an end to Microsoft's market development allowances -- discounts the company offers certain PC makers that license Windows -- which is included in the states' remedy. Elzinga's chart referenced documents from 2001 that he said proved the involvement of AOL and RealNetworks in devising these remedies.

          Kuney then showed the court a copy of the remedy order written by US District Judge Thomas Penfield Jackson, who oversaw the liability portion of Microsoft's antitrust trial, which also called for an end to Microsoft's market development allowances. That order was written in 2000, Kuney pointed out through questioning.

          "In developing your chart, can you explain why you cited a document from October of 2001 and two from November of 2001, and did not mention the identical provision in Jackson's remedial order?" Kuney asked. Elzinga answered that it hadn't occurred to him that Jackson's writings were related to what he was focusing on in his written direct testimony.

          Kuney went on to show that a number of the states' proposed remedies have identical language or similar meaning to provisions laid out by Jackson.

          The attorney asked if Elzinga was testifying under oath that provisions in the states' remedies were developed by Microsoft competitors. "Perhaps 'supported' is a better word than 'developed'," the witness responded. "I will concede that the word 'developed' is an awkward one."

          Given that admission, Kuney asked how Elzinga came to determine that the states' remedies were influenced by Microsoft's rivals. Before the US Department of Justice (DoJ) even brought its antitrust case against Microsoft, the company's competitors were making suggestions of how the software giant's behaviour should be modified, Elzinga answered. The DoJ and nine states agreed to an antitrust settlement with Microsoft last November; the states continuing litigation are seeking stricter limits on the company's business practices.

          Elzinga, who formerly worked in the DoJ's antitrust division, said he had no problem with companies approaching government agencies to raise claims about anticompetitive behaviour in their markets. However, when he sees evidence of competitors using remedies to further their own place in the market, he becomes suspicious of "rent seeking". He defined this term in his written direct testimony as "the object of which is not to increase innovation or economic output, but rather to expropriate Microsoft's intellectual property for use by competitors".

          An example of such evidence is the term "network operating system" found in the states' remedies, Elzinga said, which he claimed Novell requested be added to the provision so that its product would be covered in the remedy. The witness said Novell uses network operating system to describe its product, while most companies refer to such software as server operating systems.

          Kuney showed the document that Elzinga referenced in his testimony as the source of his information, which did not contain the phrase network operating system. Elzinga said he must have gotten his information from another document, but couldn't recall it at the moment.

          At the close of court Thursday, attorney for the states Brendan Sullivan, in a rare turn addressing the court, told the judge that the states have decided not to call rebuttal witnesses. On Tuesday the judge granted the states' request to call two rebuttal witnesses: Andrew Appel, a professor of computer science at Princeton University who testified earlier in the remedy hearing, and software testing consultant James Bach, who had not yet testified.

          The states had planned to call Bach to testify about his work with Windows XP Embedded, addressing the states' proposed remedy that Microsoft create an "unbound" version of Windows, defined as one free from additional software such as a browser or media player. Bach planned to show through a video demonstration how he could create a fully functional desktop version of XP using the embedded product.

          This point is key to the states' case, since they are attempting to refute Microsoft's claim that providing an unbound Windows would force it to pull the product from the market because the provision would be impossible to meet. With Windows XP Embedded, the states are attempting to show Microsoft has already created a modular version of Windows.

          The states made its last-minute decision to not call either rebuttal witness because they believe their case is already strong enough, said Tom Greene, California senior assistant attorney general, who spoke to reporters outside the court.

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